Smart DCC Ltd pays £200k after Ofgem investigation

Ofgem has today (Wednesday 8 July) confirmed that its investigation into Smart DCC Ltd's procurement practices, will be closed by way of Alternative Action, with Smart DCC Ltd (DCC) agreeing to pay £200,000 into the Ofgem Voluntary Redress Fund and to improve their procurement processes.

The Smart Meter Communication Licence (Conditions 11.6-11.9 and 16.4-16.6) requires DCC to undertake procurement activity without undue preference or discrimination and, where appropriate, to procure services on a competitive basis.

The regulator reviewed DCC's procurement of five contracts between 2021 and 2024. Of these, one contract was awarded through non-competitive process and one to DCC's parent company, Capita.

The regulator concluded that DCC technically breached LC 16.4 when it awarded a Fundamental Service Capability (FSC) contract to its parent company Capita. While the regulator recognises that such procurement did not lead to any identifiable consumer detriment, it notes that DCC should have processes in place to ensure that future FSC contracts are not awarded to companies where DCC is a Related Undertaking (as defined in the licence conditions).

During the course of the investigation Ofgem identified weaknesses in DCC's approach to documenting procurement decisions that fell short of its expectations for a licensee of DCC's scale and role. DCC has acknowledged that, as a monopoly provider procuring high-value and long-term services, ultimately funded by consumers, it must maintain clear and robust records of both procurement activity and the rationale underpinning its decisions.

More information can be found in the linked policy document.